UK to apply premium for energy-effecient buildings, NB says

The commercial real estate sector in the UK is likely to follow the example of the US in applying a premium to the price of energy-efficient buildings, according to NB Environment, a unit of NB Real Estate Group.

The consultancy said a recent US study undertaken by the CoStar Group found commercial properties with a US Energy Star rating sold for 27% more per square foot than buildings that failed to achieve the rating. These energy-efficient buildings also achieved rents 8.5% higher than less efficient buildings. In addition, the study showed that occupancy rates of energy-efficient buildings were 92% compared to the average of 87% for less energy-efficient buildings.

NB Environment said that the new regime phasing in Energy Performance Certificates (EPCs) for commercial property in the UK, which started on 6 April this year, would soon have a noticeable impact on property pricing. By October, all sales and lettings of commercial properties over 1,000 m² will have to be accompanied by certificate. Public-sector occupiers will also have to start displaying their building's energy rating in a public area.

Jonathan Lovejoy, director of NB Environment, said: Although the UK property market views the EPC with some scepticism, these certificates are going to influence a large number of corporate and public sector occupiers.'

'Consumer facing companies and the public sector now work very hard at improving their green credentials. They will not want to jeopardise those credentials by occupying a poorly rated building. What these occupiers do is going to have a ripple effect across the whole sales and lettings market.'

Jonathan Lovejoy says that a broader spectrum of occupiers will also want to ensure that new space they occupy gets a high energy efficiency rating. 'When professional services companies such as law firms and accountancy firms take new space they use it as an opportunity to impress all of their existing employees. They will want to be able to tell their employees that their new headquarters meets the high energy efficiency standards. The US experience suggests that they will be willing to pay for that privilege.'